Laguna Beach’s City Council voted unanimously Tuesday to explore options to close a growing deficit for operating transit services, but stopped short of imposing fares for the free summer trolley during its 10-week festival run.

Instead council members approved spending $50,000 to hire an expert consultant to analyze transit services, whose costs have escalated 22 percent over four years to $2.4 million annually. Analysis should include ridership of the city’s underused mainline bus service and suggested cost-savings, as well as possible alternative revenue sources for the summer trolleys, such as through a business improvement district or adding a surcharge to festival tickets.

They also asked staff to explore potential revenue by allowing advertising inside the summer trolleys, an option supported by Mayor Pro Tem Elizabeth Pearson, who says she knows businesses that would jump at the opportunity.

Raising parking meter rates and parking lot fees, as well as adding new credit card meters could also help fund the system, but the council agreed to defer consideration as a downtown parking management plan is under development. A draft of the plan was presented to the public this past Wednesday and is expected to be finalized in June.

The council vetoed imposing a trolley fare because of the potential for slow downs as drivers collected payment and out of fear of reducing ridership. While Mayor Kelly Boyd believes locals would be willing to pay for a ride, council members Toni Iseman and Bob Whalen both recalled how ridership spiked when fees were originally lifted.

The city’s transit service consists of its mainline service (blue and white year-round buses), summer trolleys and para-transit services provided to seniors through Sally’s Fund and OCTA. With the exception of the latter, the service’s operating costs have risen steadily since 2008. At the same time, revenues remain fairly stable.

Mainline bus service cost the city $1.1 million for 2012-13, compared to $915,000 in the fiscal year 2008-9. Its ridership peaked in 2009-10 and has since decreased annually. The service runs three buses all year, from 6:30 a.m. to 6:30 p.m. Monday through Friday, and from 9:30 a.m. to 6:30 p.m. on Saturdays.

The summer trolley costs rose to $1.2 million this year compared to $935,000 in 2008. Trolley ridership continues to increase, with 581,704 boardings last summer compared to 460,692 in 2008.

The city currently runs 18 trolleys for 10 weeks each summer, running daily from 9:30 a.m. to 11:30 p.m., using 12 city-owned vehicles and six additional ones leased each summer for $100,000. Using the last of funds received through OCTA, the council authorized the purchase of three new trolleys in January. Two will replace trolleys being put out of service, thus increasing the fleet to 13.

An additional three trolleys will be acquired through a $318,000 Proposition B grant.

Laguna is also seeking an additional OCTA Project V grant to underwrite the purchase of three more trolleys, which would reduce wait times on the route to 15 minutes from 20. Another part of the grant would allocate funds to run the trolleys on weekends, Friday through Sunday, during six non-summer months. The grant stipulates its use for new service.

As City Manager John Pietig explained, mainline ridership fees and grants don’t generate enough income to support the transit services. Laguna subsidizes transit with revenue from parking fees, tapping $710,000 from the fund to cover the gap last year. Estimates show that the system’s operating deficits would more than double to $2 million over the next 14 years. Some council members have questioned the subsidy, which depletes funding for other potential projects such as the village entrance.

Pearson pointed out that the mainline bus service costs the city almost as much as the summer trolley service even though year-round bus ridership amounts to about one seventh that of the trolleys.

Last year’s transit fund report suggested modifications such as eliminating the mainline route to Dana Point’s Ritz Carlton, which costs about $45,000 a year; eliminating the service to Three Arch Bay, a route that costs about $75,000 annually; and eliminating Saturday service, which has the lowest ridership and runs a tab of $40,000 each year. That report also suggested raising adult fares to $1 from 75 cents and senior fares to 50 cents from 30 cents, to generate an estimated $85,000 in fare income compared to $70,000 presently.

Before choosing any options, Iseman highlighted the importance of figuring out exactly who rides the blue and white buses so as to determine who would be affected by modifying service and whether other options might be available for those patrons. She said paying a true expert $50,000 to provide answers “would be money well spent.”

Even though Pietig suggested Tuesday that the council might consider using in-house experts to review the system for a lower cost of about $10,000, an option favored by Boyd and Pearson, council member Steve Dicterow, like Iseman, supported hiring an outside consultant. “I want someone to also look at our system and compare it to other communities,” he said. “There are experts who can help us make the system as good as it can be at the lowest cost.”